How Financial Technology can boost business performance
Financial technology (FinTech or, in short,) refers to the technology that helps improve and automate the provision and utilization of financial services. It’s rapidly becoming essential in everyday life and business. According to this report on market growth from the World Bank, most types of FinTech-related firms operating in North America experienced a 21 per cent increase in revenue for the first quarter of 2020, a period where other industries saw significant reductions. For leaders in various sectors, FinTech has plenty of opportunities to improve business performance.
First, what is FinTech?
FinTech is a term used to describe software and other advanced technologies utilized by businesses to provide better and more efficient financial services. Customers who are tech-savvy, particularly Gen Z and millennials, expect financial services such as banking as well as loans, money transfer managing loans, and investing to be simple as well as scalable and secure with the help from a person or the visiting of banks. A study about FinTech created by FXCM highlights how the market has grown significantly after the financial meltdown of 2008 since a lot of businesses and individuals were looking for alternatives to the traditional banks. FinTech firms provide the transparency and technology that banks lack and they can greatly impact the cash flow of growing companies. In addition, advances in technology in cellphones and computers led to the development of fresh and innovative solutions to financial issues.
FinTech is a broad term that describes the myriad of inventive ways that technology is being utilized to create, provide and improve solutions and services for financial institutions around the globe. While it isn’t making traditional financial companies out of date, FinTech is revolutionising the world’s financial system by requiring traditional businesses to reconsider their old-fashioned methods of business and devise options that are more efficient and customer-focused, and also more affordable.
A lot of applications are built on the latest technologies such as Artificial Intelligence, Blockchain and Deep Learning that enable financial firms to collect large quantities of customer data to determine patterns of usage, and even substitute human intervention.
In general, the definition of FinTech is a term that can be applied to any invention or technology that is able to optimize or enhance the way people manage their businesses and carry out their financial transactions. Some of the useful products and services changing the definition of financial services are:
Transfers of funds and online remittance instruments (domestic and foreign)
Online payment platforms
Advisors for investment and management that are automated
Peer to peer (P2P) funding and tools for crowdfunding
Platforms for trading in financial assets
In the world of business small businesses are confronted with many issues and operational obstacles, and, therefore, require every assistance they can get to stay afloat and even grow against the “big guns”.
With the help of FinTech The companies that use FinTech are able to better manage their cash flow including working capital, international payments. They can also reduce costs, increase their overall efficiency and create products that are tailored to clients and improve customer relations.
One methods FinTech companies can be game changers for small-sized businesses are:
1. Simpler Business Loans
Just some years ago, there were only a handful of financing options available to begin a new venture. The most commonly used was to go to banks, a investment company or a lending institution to obtain money at interest. The amount borrowed was contingent on a range of factors , including the creditworthiness of the lender, their activities profile, industry/market conditions and the lender’s capacity to lend, and more.
Traditional lenders are typically not interested in lending to small-sized businesses due to the fact that the amount of the loans are small to draw their attention and also due to the fact that these firms have earnings and activities that are seen as inconsistent and thus potentially high risk. Additionally the process of applying for loans can be a hassle slow-going and covered with the red tape of bureaucratic procedures.
With FinTech small businesses are able to overcome the conventional ways to receive loans to start expanding and running their companies. By utilizing technology in a creative way, FinTech is bridging the gap in funding between small-scale business borrowers and lenders, and creating a business environment that is more vibrant and dynamic. The Peer-to-Peer (P2P) platform for lending as well as crowdfunding platforms directly connect borrowers with prospective lenders. In the end, the borrower can get capital at lower rates than bank loans, and lenders earn income – an all-win scenario.
2. Simplified Payment Systems
In order for any company to be successful and survive to be successful, it should have an effective system for managing money. With this method, it will be able to get the payments due on its invoices. failing which puts it at risk of chance of losing of revenue (and consequently profits) as well as accumulating bad debts. In the end it could make the business’s operations unsustainable. The company must be able and capable of paying its employees, creditors and vendors as well as its suppliers. In the event of a failure, it could result in legal consequences and could also affect its standing in the marketplace.
In the early days of FinTech payments and receipt procedures were challenging to manage and took a long period of time to complete, and were generally cash-based in nations with inadequate financial infrastructures. Furthermore, the existence of borders across the globe resulted in transfer of money across borders as well as payments were extremely expensive. FinTech has revolutionized the entire process and transformed these problems into something that is almost non-existent. The fusion of technology and financial services has resulted in the development of mobile and online payment systems that allow firms to collect money for services provided to customers and to also make payments to suppliers or vendors for services they receive regardless of the their location or currency.
3. Profit Maximisation
With the rise of FinTech, the infrastructure around capital markets has undergone rapid changes, particularly in the way technologically-enabled platforms have appeared in traditional over-the-counter-type markets. The “electronization” of OTC products is due to the post-crisis regulatory environment (e.g. Sarbanes-Oxley Basel III, European Securities and Markets Authority) and also by the potential benefits in the economies of scale.
Whatever the the type of business or industry regardless of the type of firm, it usually helps bring lower costs, but it can also increase profits and revenue. In the end, the fusion of technology and finance has resulted in the creation and development of platforms for trading that gather and analyze market and user information to discover patterns, offer general market information, develop forecasts and improve the potential for profit of firms and traders.
4. Management Tools for Accounts Management Tools
In the end, any business that hopes to grow in the coming years must be able to manage the costs and expenses of its operations to increase revenues and, ultimately, increase profits. If a business isn’t capable of paying its employees’ wages and pay its suppliers or collect unpaid payment from its customers or invest in inventory or assets and inventory, it won’t be able to sustain or even grow.
Thanks to the advancements in financial technology small-scale businesses have many options to assist them in doing all of this and more. Online accounting systems are accessible to track the flow of cash in real-time and ensure that their business operations are operating smoothly.
Invoices and expense apps which are often free – allow businesses to keep track of their expenses, identify ways to lower costs and issue invoices to customers promptly. There are many different ways that FinTech eliminates the stress out of running a company and makes it easier for small-scale business owners so they are able to stop worrying about tiny details and concentrate on expanding their customer base and business.
Due to the increasing use in the Internet and mobile phones across the globe, FinTech firms are highly motivated to design solutions for financial services that make use of the power and efficiency inherent in these technology.
Traditional banks charge huge charges for money transfers that over time can lead to significant losses for the parties affected. FinTech-developed mobile and online banking solutions not only cut down the costs involved in transferring funds between different parties, but can also eliminate the necessity of using paper money for transactions in the financial sector. This helps make the financial system of an entire country more transparent since the move to ‘cashless’ is a good way to curb criminality (which is a cash-only business) and also prevent tax evasion and allow for the opening of the shadow economy. From the standpoint of companies this also makes the business environment more stable and thus more competitive.
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Clients and customers form the core of nearly every company in the world. The end users are content since FinTech solutions are able to provide simple designs, easy access and use at any time. They also minimize human’middle-man interventions and speed up transactions. Companies are also happy since these products and services help them quantify and manage their business risk as well as expand their customer base and develop specific products to meet the needs of their customers. This means that FinTech assists small businesses to improve customer acquisition, retention and engagement and, consequently, improves their profit and revenue potential.
As I mentioned before one of the major problems that all new and emerging companies face frequently is handling overseas payments. one Fintech start-up that’s revolutionizing the international payments landscape can be found in Instarem.
But, not all businesses have adopted this technology in the same way, such as our report annually on State of Expense Management exposes. Certain CFOs are yet to discover the solution that’s the perfect fit to their needs, given the vast array of choices available and others are skeptical about the huge leap. While concerns about digitizing finance functions are legitimate however, it’s crucial to be aware of the risks associated with being in the shadows of this technology.
How FinTech Benefits Businesses
With FinTech companies can be provided with a competitive advantage. Because of the power of the Internet businesses can now access their extensive and feature-rich financial software from wherever they happen to be.Even small and medium-sized businesses are able to benefit from it!
Here are some more ways FinTech can improve business performance.
1. Reduces Costs
In comparison to retail and corporate banks, solutions provided by FinTech are usually less expensive. An Forbes study on alternative banking shows that even though traditional banks offer online access to accounts and transfer funds, they aren’t at the forefront of technological innovation that benefits customers because they are still dependent on fees they charge. FinTech however, on the other hand, is designed to make banking simpler and more personalized and, most importantly, less expensive for business.
2. Offers Additional Financing
Small-scale business owners require cash to run their businesses However, obtaining conventional loans isn’t simple. With FinTech Online lending firms can make it easier and faster to complete the small-business loan application process.
Instead of walking to a bank, carrying with boxes of paperwork and going through a lengthy examination process that could result in rejection, small-scale entrepreneurs can apply for loans online. This is possible using either a smartphone or laptop and will be granted approval in a much faster speed than conventional bank loans, and avoid the lengthy and often difficult procedure.
3. Extends Boundaries
Prior to the time that FinTech became a reality Accepting payments from overseas was expensive for some companies because credit card companies charged expensive charges. There was a substantial expense associated with transfers of money across international borders as well. FinTech has transformed all that, since accepting payments from overseas and moving money to another country has become more affordable and more simple and more convenient for conducting business across the globe.
FinTech has opened up a new world of possibilities for businesses. It continues to transform the world of finance and allow business owners to streamline their daily business operations and help the customers they serve better. The financial technology industry is flourishing across the globe, and is revolutionizing the world of banking.
Business Intelligence and FinTech
With the increasing competitiveness in the Fintech market Investors are searching for methods to invest wisely. This revolution has always been unusual, distinctive, and unique. According to the global report, Fintech has experienced a abrupt decline from $46.7 and $24.7 billion in the span of 1 year i.e. the period from 2015 to. The reports only tell just one aspect part of the tale, the other statistics show the other side.
It’s evident that Fintech provides a wide range of opportunities for investors. But, they must be cautious and make sure they invest in areas that aren’t filled with. If you want to invest in meaningful ways and make the most of resources available it’s essential to discover profitable channels.
From giants of the tech industry and traditional banks, every company is competing to be noticed, thus gaining large market shares. The government of various nations are also working to implement regulations regarding Fintech. In simple terms it is essential to find the pathways which will alter the landscape of Fintech and assist you in making the most out of your resources.
The rise of Business Intelligence
Web 2.0 Business Intelligence as well as data analytics comprise among the most efficient tools for this purpose. Making use of these tools will allow you to stay ahead of the curve, thereby accelerating your profits. Here’s how BI can open new opportunities for Fintech:
Business Intelligence helps in monitoring the user’s behavior
Acquiring a deep understanding of user behaviour will help the Fintech sector to a large extent. Because Business Intelligence helps you track and track user behaviour and provides you with the chance to make most appropriate investment.
The most important thing is that data analysis can aid in making the right decisions and helping you develop effective strategies. The most renowned robot-advisors like Betterment and Wealthfront have disrupted the investment industry through the use of Business Intelligence.
Uncovering market trends
When it comes to investing it is essential to be aware of markets and their particular developments. This is what Business Intelligence helps you do to reduce the risk of making the wrong decisions and making poor decisions.
Security is improved with Business Intelligence
We’ve seen a lot of instances in the past when breaking the encryption security for an FinTech company’s data isn’t an issue for the known fraudsters. Business Intelligence enhances security and facilitates effective behavioral analysis. This means that the most fraudulent behavior is easily traced and investment funds are less likely be re-used.
- Unmatched user experience
Tech firms have an advantage over traditional financial institutions in terms of providing an unbeatable customer experience. FinTech has reached new heights with the advent of innovative applications and web-based services. Innovative technologies were the order of the moment and that’s precisely where data analytics and BI came into the equation.
The rise, popularity and profits are the result of the experience that it gives its customers. It is no surprise that Amazon had thought about BI integration decades ago.
While there is evidence that performance in the Fintech Industry isn’t that impressive in the US but reports from Asia reveal a different picture completely. The continent has overall investment amount that is $7.1 billion which is massive and impressive. Therefore, BI is proving to be an effective tool in helping companies from various segments of the economy and is essential to the competitive marketplace of today. Fintech has been evolving into a highly competitive marketplace. A analysis conducted by KPMG found a decrease in investment in 2016 and investors are more wary about investing in sectors that become overcrowded. Payments and lending are two areas which saw increased participation over the the past two years.
You’ll notice that the majority banks and banks institutions are making the shift to the use of financial technology. The main reason is that banks and financial institutions are expecting a huge expansion and the majority have budgets that are well-defined to implement technology and build a large infrastructure. It’s almost compulsory for fintech companies to change their strategies and getting the best results from it is likely. Finding the most effective of these technologies is what will lead your business to success, productivity and profit. One of the primary methods to achieve this is the most renowned and demanded technology, Business Intelligence (BI). Despite the fact the fact that Business Intelligence Services have been an integral part of large business domains but it hasn’t been utilized in a comprehensive manner for finTech and, therefore, there’s a vast opportunity that is open to those who are willing to take action immediately. It is an absolute advantage over other companies who are still in the thinking of making their finTech solution effective.
The business intelligence (BI) and analytics are beginning as the best sources. Businesses that understand importance of business intelligence have already started to realize its advantages. There is still a lot to be understood in fintech and the first firms to make sense of it will be ahead of those who aren’t. This is the perfect time to implement BI within your fintech firms and, as such, we have identified the top five aspects that business intelligence plays an important part in the fintech industry.
Monitor user behavior
Acquiring significant information on users’ behavior can aid the Fintech sector to a large extent. Because Business Intelligence allows you to observe and track user behavior as well as monitor user behavior, you have the opportunity to make the best investments.
In the end, data analysis can aid in the process of making decisions and help you develop effective strategies. The most popular robot-advisor companies like ‘Betterment’ and ‘Wealthfront’ disrupted the investment industry using Business Intelligence.
Uncovering market trends
When you are forced to make investments it is essential to be aware of what the marketplace is and particular developments. This is the reason Business Intelligence helps you do to reduce the chances of making the wrong decisions and making poor decisions.
Another area in which analytics and BI are gaining significant use is fraud and security detection. Fraud has been a significant problem in online payments for quite a while. A report by Radial reports that overall fraud has increased by 30% each year. This year, there’s been an increase of 200% on “testing” or the process where fraudsters make small purchases to test the legitimacy that stolen numbers on credit cards.
Behavioral analytics play an important role in identifying fraudulent behaviour. Analytics are able to track and detect patterns that can reveal the methods used by fraudsters. So merchants and processors can set up security measures against these attempts. This information can be used to improve methods for preventing fraud that are automated to reduce the chances of authentic transactions being flagged fake. Customers who are experiencing these problems regularly consider it a poor user experience and should be ignored, and could end up being a loss of customer for the company. Many companies have recognized the their importance in Business Intelligence and started had work on increasing their security a long time ago.
Other sectors of Fintech must be prepared with these precautions also. Fintech services are the most targeted by cybercriminals due to the wealth they manage. Analytics that are properly executed along with Business Intelligence can guide prevention strategies.
Supreme user experience
Tech companies gain an advantage over traditional banks in terms of providing the best customer experience. finTech has seen huge growth with the advent of innovative applications and services that are available online. Innovative technologies were the necessity of the day and that’s precisely the point at which business Intelligence and Data Analytics entered the picture.
The popularity, growth and profits from Amazon are the result of the experience that it offers its customers. No matter what company been thinking about Business Intelligence integration long ago.
Data officers in charge are beginning to think about whether the adoption of Business Intelligence can influence on an effort to modernize their companies. The report defines its real importance as being not “measured by the solution that you choose to use, but rather how your organization utilizes the software to improve on the company.”
Instead of appropriation, managers are now focusing on how data and analytics have changed the way decision-making is made, via the evaluation of programs that foster involvement, like internal communities to make sure they are getting the most out of the Business Intelligence systems.
After having a better understanding of the significance of Business Intelligence firms in fintech should consider investing in it from the beginning. Utilizing analytics in all areas of the fintech industry can bring many benefits. Analytics can provide more effective ways to interact with customers, provide the customer experience better, and also protect the company and its clients.